Welcome back everyone. Today on the Joseph Carlson Show, we get into yet another busy week in the stock market. Last week felt like a year, it felt like. A long time. Period to invest throughout all of this chaos. Uncertainty, all these constant changes in policy regarding tariffs, we've seen the effects that it's had on the 10 year Treasury commentary from different businesses and the impact the.
Whipsaw of the stock. Market, well, now we get all of that, it's continuing on and we're entering into earnings season. This is where these companies. Give their report card of what? Happened over the past 90 days as well as they more importantly give commentary on their. Views and perspectives. Of the current environment and what they're expecting over the next 90 days or the next year, this is where. We get to see. What companies are saying and this?
Week is very busy if we look at the. Qualtrum earnings calendar. This shows you day by day, dynamically which companies are reporting earnings and information about their earnings. And here we have on Monday, Goldman Sacks. That it's already reported. Earnings. Now I circled some other really important companies. For example, on Wednesday, this Wednesday we have ASML. This is one of my key investments, one of my newer ones. I made a significant bet in
ASML. TSM is also reporting earnings. On Thursday and we're. Going to see both of them this week. Their commentary on what to expect with iPhone demand with chip processing and AI demand. Everything related to all these. High end companies. These companies in many ways represent the demand. That all these big. Tech companies are facing. So this is an incredibly. Important week with these two very crucial companies reporting.
And then on Thursday, we also. Have another one thrown in after market. Close. We have Netflix. Netflix is one of my most significant investments. It's a company that I've. Talked about for years. It's the reason that the Story Fund is doing so well, and we get to see how. They're doing and what they expect for the future.
So we're going to dive into the numbers, what the expectations are, and I'm going to make some predictions overall with this earnings season of what all these companies are going to say. I believe there's going to be some common themes, especially regarding the tariffs and uncertainty. So I'll be going over just a few predictions about this earnings season. Now, of course, we also have some news to get to. We have an interview here, This one is.
Ray Dalio. He went on to Meet the Press and I like. This because this. Is more of a. A territory that's. Outside of the investment circle, it's not CNBC or Fox News. Now we're getting to. Just everyday people, everyday people. That don't even work with finances. They're not addicted to looking at the stock market, just normal people. And then you have Ray Dalio there. Who's like the most?
Bearish of all the bears. Sitting there just blasting them with all this incredibly frightening information, Ray. Dalio I've criticized. Many times as being a mega bear, a continual bear, he's persistently negative and concerned and worrying about one thing or the next. Well, this made it the prime time and this. Interview went hyper viral. Getting multiple millions of views just on YouTube. So we're going to be looking over some of the key arguments he makes.
I'll be responding to some of the things he says. That are incredibly bearish. On this environment now to balance out Ray Dalio and his gloomy outlook, we also have to look at what Tom Lee is doing. He is much more on the bullish. Side always looking for. Opportunities optimistically and he's very constructive about what's going on. So we're going to get the viewpoint of both someone that's. Overall bearish. And someone that's bullish. And then finally, one of the
most. Amazing stories I've read. Is that this? AI shopping app that this guy made promised that if you buy something from the app, it was the artificial intelligence going in and buying it from these random websites. So you could just click on something you want to buy, you didn't have to do anything else. The AI would figure it out. But in reality. It was all powered by. People in the Philippines, this is one of the most crazy stories. That I've heard of. And it's just the state.
We're in This story is emblematic and representative of the. Current state we're in, so we have a ton to get into in this episode. It's going to be an interesting one. Now before we jump in, just one thing I have to mention. You'll notice that I'm not sponsored by different companies. I'm not constantly plugging VPN. Services or audible or whatever. It may be I don't have any of them as sponsorships and that's an intentional choice.
I could if I wanted to, but instead I focused on building a product that I think you'll actually enjoy. Something that I think. Offers a real value. To investors, that is. Qualtrum Qualtrum is $10 per month. And the reason that I can charge. Such a low price for it is I. Own it outright. There's no other partners, the team that. Works on it with me. Is incredibly efficient. Qualtrum costs 1/3 or 1/4 as much as other. Stock analysis tools and in most
cases does way more than them. You have the insights page. That gives you all. The fundamentals of a company in Visual. Format. Going back 30 years you have KPI's which are key. Performance indicators of companies like Netflix subscribers. And revenue by regions? You have the discounted. Cash flow calculator that's incredibly simple to use. Earnings call transcript summaries, you have the earnings calendar and so on and so forth. It comes with a ton of functionality and it's getting
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To grow. So try that. Out if you haven't now let's go ahead and jump into this week. We have starting off Monday, a company. That's already reported. Earnings, which is Goldman Sachs. For long term investors, we like a market that's generally not that. Volatile one that just. Goes up over. Time, but for day. Traders for short term technical traders. They love a volatile market. A surge in trading activity fueled by investor uncertainty about president. Trump's policies is.
Minting money for Goldman Sachs and other big banks. The Wall Street. Firm joined at JP Morgan and Morgan Stanley. In reporting a bigger profit for the first quarter fueled by record revenue. In its equities trading and lending unit, banks have been raking in fees. As investors reposition their portfolios. In anticipation of how trump's trades and other economic. Policies might rattle markets, but in terms of anticipating the future, the commentary of the CEO. Is one of the ones of many
business leaders saying. That they believe we're. Going into a recession. Quote The prospects of a recession have increased with growing. Indications that economic activity is slowing down around the. World. So Goldman Sachs is yet one more voice. To raise the red flag of a recession. With the Goldman Sachs CEO saying that there's a higher. Percentage chance of a. Recession. I believe this is a good point to jump into some predictions. I have overall. About this earnings season.
This is broadly. Speaking across the board for every company, I believe there's going to be a lot of talk about consumer slowing down. We saw a little bit of. Evidence of this. Early in the year with Texas Roadhouse. They noted that last. Year things were incredibly good. There is strong. Growth, but going into this year they saw in the past just couple. Of weeks. Customers slow down. Same store sales were flat. They weren't growing.
That was the first red flag of a consumer LED recession. But that was before the tariffs. Were introduced With the tariffs being introduced, the level of uncertainty has gone up. In fact, we have. Some surveys here just over the past. Couple of weeks showing that consumer sentiment fell 11% in April. It's down 30% since December of 2024.
Now if consumer sentiment is falling and customers don't want to spend money as much as they did, that's going to show up in the revenue of companies in their bottom line. So we're going to hear a lot of companies reflect. That a lot of. CE OS say that consumers are being more cautious. They're trading down a little bit, they're wanting to spend a little bit less money, they're wanting to see more. Deals. We're going to see a lot of commentary.
About that with every. Company that works. With consumers, which is. Almost all of them. Then we also have this theme playing out right now and I believe something that's changed over just the past couple of weeks. Since all of this tariff. Policy has come into play, which is that. Business leaders. CE OS and investors alike have become aware. That A. Small group of people, just a few people in the United States can rapidly implement. Policy that dramatically changes
the potential. Earnings of companies and their entire landscape these changes are dramatic, monumental changes to business prospects, led by someone that can do it at a whim without any regard to Congress, and someone that has the. Wherewithal to do it? And face the consequences. That is a change. In risk assessment, whether you're pro. Tariff or anti tariff. This new realization that only a few people can do this so rapidly into such a great magnitude is a new.
Uncertainty in the market that investors will price. In. The market is already uncertain. Stocks are already. Unpredictable to some degree, but this new adaptation that. Investors have become aware. Of has raised the. Unpredictability to a whole. New level now CE OS are. Unsure. Of how much money they're going to earn over the next three months, of how well their business is going to do, because not only do they have to. Project their future growth based on their business performance.
But they have to. Guess about policy. Of which they can't possibly know. They can change day-to-day. So I believe there's going to be a. Lot of commentary about CE, OS and CFO saying we just don't know. We have no clue what the tariff rate will be. But we can give some vague predictions based on what it may be. I think there's going to be a lot of guessing games, a lot of just kind of maybe it's this and in that case the business might do this, maybe the.
Tariffs are lower. And it's business as? Usual, but either way. I think CE, OS and business leaders are going to be negative on the tariffs. They're going to mention how the cost of them are passed on to the consumer. They're going to mention how it's going to slow growth. They're going to mention how it's going to raise the chances of a recession. More than they were before the tariffs. I think we'll have a repeated. Theme of CE OS relaying. That information to investors just like the.
CEO of Goldman Sachs did now let's go ahead and take a look at some of these companies individually and breakdown my expectations for these earnings reports. First of all, this week we have. A SMLASML is a stock that I have in the passive income portfolio so it's in my main 1 here and it's one of the newer position currently the stock. Is in the red by 8. Percent. That's $3000 on a 42. $1000 position. Now stock going into the red soon after you buy it is.
Really not a problem. In fact, if you read Peter Lynch's. Books. He talks about how. His best investments happened. Three years. After buying the stock, that's usually when he. Saw the best. Returns from his companies. Was three years after. I've owned FML for well less than a. Year so this. One really hasn't had a lot of time to grow and I'm still very optimistic about this company. Now if we go to the earnings calendar, ASML reports Wednesday
before market open. We can go to Qualtrum here and look at the what? To watch for this gives you a summary of the biggest points to look. For for each company with ASML in. Particular this. Company beat on their expectations big time in Q4, so last quarter they had a monstrous. Quarter. It was actually incredible. We see the ASML. Far surpassed their. Expectations with 9.3 billion.
Dollars of sales last. Quarter, we're going to be looking to see if they continue momentum or if they say things are going to. Slow down dramatically. The other thing that I'm most interested to see in terms of ASML is not only their commentary on what the demand outlook looks like. For the different. Chips and high end things like car chips and phone chips and whatnot. But I also want to see what they say in terms of geopolitical. Factors.
Their business in China. How they view the tariffs. I want to see what they say about all of that coming into play. I think they'll have overall optimistic outlook. Investors are going to try to. Dissect ASML and see whether or not they can see the demand outlook for artificial intelligence with companies like NVIDIA, companies like Google, companies like Meta and Amazon with Asml's report. So this company. 'S report will act like the first. Weathervane of what direction the AI demand?
Looks like for. All these other companies, the other. Incredibly important company reporting. This week as TSM. A lot of people have asked why I. Invest in ASML instead of TSM, and Simply put, ASML has even fewer competitors than TSM does, and TSM is a highly concentrated monopolistic business. So that gives you an idea of how monopolistic ASML is. But either way, they're. Commentary and what investors are going to try to look at. Is very similar for both of these.
Companies, they're going to look at what the demand outlook is. For all of these devices. Things like Tesla's and. Ev's chips. For smartphones and televisions, you name it, all of that comes through TSM. Based on their most recent earnings report, TSM noted that their AI. Accelerator revenue showed impressive. Growth and that they expect. It to double. In 2025. So they've already noted that this form of revenue. Is going to double and investors are going to see if that's still
the plan, if that's. Still their. Projection, whether or not that estimate's moving upwards or down, are staying the same. Overall both. FML and TSM are. Going to be companies and investors look at. As the weathervane for big tech and other big companies, these are going. To be the first. Ones giving us an indication of what to expect now, moving on later. Throughout this week, we get to Thursday after market.
Close and we have Netflix Now let's take a look at my position in Netflix. This company is one of the. Larger positions. I've held it in the story fund for years. I've really liked. This company for a long period of time and I bought more of it during the dip which. Really bolstered the performance of this. Portfolio. It's made-up for the majority of the games with $51,000 in the green. Even Amazon OR. Google or. Microsoft pale in comparison of
buying Netflix during the dip. So of course, Netflix turned out to be. A great deal buying it in 2022 when it was almost. $200 per share. The question is, what does it look like Now? If we look at what to expect from this company, we can take a look at some of the the key things to look for with Netflix. Netflix is executing on a lot of things at the same time. For example, one of them is their advertising tier. I want to see how many. Users or members they.
Have on their advertising tier. Then we have their content spending forecast. Netflix has said that. They've increased their budget a lot. And they're increasing it to $18 billion from 16 billion. So they've increased the budget. By $2 billion, that's money they could have generated in free cash flow, but they're now producing more and more content. We also have big currency impacts on this company and their hedging strategy. Netflix makes over. 50% of their revenue.
Outside of the US, so currency has a big implication on their earnings and we have the market penetration and price. Strategy. Netflix has frequently announced price. Increases on their membership. During their quarterly reports, so they'll. Report earnings, then they'll announce a price increase. They've done that over and over again. I don't know if they'll announce the price increase this. Time because they've recently. Done so, but Netflix is a. Company with substantial pricing.
Power and they've leveraged. This over the past couple of years. Not only have they. Increased their budget dramatically, but they've increased the price of their service as their service. Value has grown. When I look at Netflix today and my assumption going into this earnings report, I still love the company. I still love the stock where it is today. It's a little bit. More than where I'd want. To buy it if I was first entering into a big position. I'd try to buy.
It for around 730. Dollars couple 100 bucks. Lower than it is today, but even at today's price, I think that it will beat the market. And the reason why is simple. When investors look at valuations, they make the same mistakes. Over and over again. They look at the multiples of a company without looking at the growth and I see this same thing. Over and over again, people say it's crazy. That Netflix. Trades at a 30. 6 Ford multiple.
Whenever you look at the multiple of a company, you have to match that with the expected growth of the company. For example, yes. It's true that Netflix trades at a 30. 6 multiple. But if we go down and look at the earnings growth of the company, it also adds in some context. Over the trailing 12 months, Netflix has grown their earnings per. Share. By 65%, so 65% growth. Is incredibly fast. That's three to four.
Times the average. Of a. Fast growing company that's 10 times faster than the S&P 500. So obviously when a company is growing earnings 10 times faster than the S&P 500, the multiple deserves. To be a little higher. Netflix's earnings per. Share has skyrocketed over the past couple of years, so this 35 Ford PE ratio. Could look very expensive. If the company grew by 6 or 7%. Earnings over the next five years, but my expectations for Netflix.
Is that it's? Going to grow more in line of 25% earnings per share growth over the next. Five years. If it does that, it'll still justify its. Valuation. Even with the uncertainty in today's market, I believe these companies will do well. I think ASML is going to have great earnings. I think that the company is undervalued. The same thing for TSM and Netflix. Netflix hasn't gone down as much because the company is not quite affected.
By tariffs, but I also believe they're going to have very. Strong earnings. So my expectation going into this week is even with the. Overshadowing of uncertainty that earnings reports are going to be. Good. Now moving on, we get to some news. That I won't call. Shocking news, in fact, this is. Probably the most predictable. News that you could. Ever, ever dream of. And that is that Ray Dalio is making media rounds predicting calamity and future economic distress.
Now saying that, Ray Dalio. Is going to predict. Future calamity and problems and warn about things is like saying that the ocean is wet. Or that the sun will rise from the east tomorrow. It's a prediction. That you can make. With a relative level. Of confidence. And here we have again Ray Dalio doing the media tours talking about what may happen in the future, and this one had millions of views. Because it had a very catchy tag that Ray Dalio predicts. Something worse than a recession.
Talking about a recession, do you think it is likely that the United States will dip into a recession because of President Trump's tariffs? I think that right now we are at a decision making point and very close to a recession and I'm worried about something worse than a recession if this isn't handled well. A recession is 2 negative quarters of GDP and whether it goes slightly there. We always have those things. We have something that's much more profound. We have a breaking down of the
monetary order. We are going to change the monetary order because we cannot spend the amounts of money. So we have that problem. And when we talk about the dollar and we talk about tariffs, we have that we are having a profound changes in our domestic order, how ruling is existing and we're having profound changes in the world order. Such times are very much like the 1930s. I've studied history and this
repeats over and over again. So if you take tariffs, if you take debt, if you take the rising power, challenging the existing power, if you take those factors and look at the factors that those changes in the orders, the systems are very, very disruptive. How that's handled could produce something that is much worse than a recession. So here he uses a lot of of words. Like changing order monetary and managing changing order. It's a lot of. Euphemisms or abstractions of
what he's really saying. When I listen to this, I think he's talking about changes to the US. Reserve currency status. Changes to how businesses are managed and the. Debt. How the debt? Is being handled. The budget deficit can be reduced to 3% of GDP. It's about it will be about 7% if things are not changed, If it could be reduced to about 3% of GDP and these trade deficits and so on are managed in the right way, this could all be managed
very well. I believe that members of Congress should take the pledge, what I'll call the 3% pledge, that in one way or another that they will get that budget deficit down to that number. If they don't, we're going to have a supply demand problem for debt at the same time as we have these other problems. And the results of that will be worse than a normal recession. He's saying this lightly.
What he's talking about as the US literally going bankrupt, where the interest rate on the US debt becomes so expensive that. Even if we raise. Taxes, even if we try to. Tackle it we can't pay for. It, and the fact that we can't pay for it, means that taking out. Future debt. Becomes even more expensive. Because investors don't want to buy the US debt. Because the credibility goes down. This is a vicious circle.
This is what the government dramatically needs to avoid, and in this concern, I share it. Wholly with Ray Dalio. I think that the US needs to get the budget under control. I think they need to get it down. To 3% of. GDP he talks. About how Congress. Should make a pledge to do this, but Congress has the opposite incentive of controlling the debt. Congress's incentive. For themselves, which everybody? Looks out for #1 right? Congress's number one incentive for themselves.
Is to get re elected. The way that they get re elected is by. Promising lots of goodies for their constituents. That you're going to get your your thing you want. Hair that we're going to pass a budget that gets the thing you want hair. That everybody gets the stuff. They want, nobody wants to pay on debt. That's not something that every constituent is calling in and saying, hey, did we pay down the
debt today? That's not a popular item, but that's exactly what we need to be focused on. When would Congress ever agree to a rule like that? It goes against their first incentive. Which is to protect. Themselves. Ray Dalio O'Hare realizes. He's on an everyday show with normal people watching this, so again he uses. A lot of light. Terms and euphemisms. And he tries to lightly explain that owning someone else's debt is only an asset. If they have the ability to pay
it back. The value of money. What is a store hold of wealth that is a bond. In other words, one man's debt is another man's assets, bondholders. And so we're going to be in a situation where if that store hold of wealth is in jeopardy because there's too much supply and demand and so on, and we have a monetary inflation, we will have great disruptions. And that that could be like the breakdown of monetary System 71. It could be like 2008. It's going to be very severe.
I think it could be more severe than those imagine if we have have a downturn politically and and and international conflict. Very grim potential. Outlook from Ray Dalio Ray Dalio gives these. Warnings that always get a lot of attention and a lot of media just like any other. Predictions of calamity. And one of the things that. These hosts always do. Like this one does here is she mentions that. This is the guy that accurately predicted the two. 1007 financial crisis and while it's
true. That Ray Dalio predicted that. They don't. Mention that he also predicted 20 different crises before and. After that didn't happen. Overall, his accuracy in predicting. Economic calamity is incredibly. Poor. He almost always is wrong. He rarely ever gets it right. He's the definition of the clock. That's broken. That's right, twice a day if a clock is. Broken and says it's. 6:30 that. Clock is going to be wrong almost all the time. Until it's 6:30. And then it will be right for
one minute and that. Is Ray Dalio. He's almost always. Wrong with his predictions. You can look. Over his entire history. And when he finally has something bad happen in the economy, that's when he's finally. Right. But overall, these predictions are highly theoretical. There's a lot. That the US can do to avoid these type of calamities and talking about them this way, I think. Overall is very good. To sell books. Very good to get. Clicks very good to make it seem
like you can see the future. And you have a bigger thought process. On this, but in most cases it's entirely unhelpful to investors in most cases. The market goes up. In most cases, it's good to stay invested all the time if we look. At an investor that's the opposite of Ray Dalio. Someone that is optimistic, advocates staying in the market, advocates looking at things through the lens of repair and recovery. That is Tom Lee. The reason that Tom Lee is more. Reliable than Ray Dalio is
because statistically. Being in the market all the time. Is the more accurate. And better choice than being concerned. About stocks all the. Time staying out of the market and trying to predict when there's a market crash coming. So Tom Lee, statistically. By his. Bullish stance by always being optimistic. Will be far more. Correct than Ray Dalio. He's kind of the inverse of the broken clock. Tom Lee will be correct. Almost all the time.
Except for a few. So here Tom Lee is once again talking constructively about how he thinks now is a good time to buy I. I do think markets are getting a little desensitized. What I mean, yeah, yeah. And, and I think part of it is if someone had an investor hat on, not tactical hat, you know, really good opportunities are emerging because the number of stocks below the 200 day moving average hit, it was like 15% historically. That's a, a strong buy signal. I mean, you're going to find a
lot of bargains there. And the VIX got above 50 and it, it almost always pays you to buy the stocks when VIX is above 50. But in the near term, it is a, it's a roller coaster. I mean, it does feel like we're having a lot of zigs and zags and even over the weekend. But to me, I think everything that happened over weekend, including the Sunday, further explanations, all of this is still unequivocally positive for stocks. Tom Lee is still undeterred from owning stocks. He also comments very
specifically on this whole. Idea that people are. Abandoning the. US that people. Don't want to do business with the USI? Think that is the narrative at the moment that you know, US exceptionalism is over and people are selling treasuries
and dollars to buy other assets. But I'm I'm not in that camp that it's sustainable because unless weaker dollar and higher yield suddenly makes the best companies in the world outside the US, you know, the best and the most important companies in the world are American companies. They've produced the best shareholder returns and you know if you look at the S&P, 40% of the returns of the S&P come from
new companies every 10 years. Is there going to be suddenly the best new company coming out of Europe instead of the US because of the dollar? And I doubt it. And I think U.S. companies are going to adapt. Tom Lee's logic behind still staying in the US with your investments makes perfect sense to me. I agree with it 100% that right now in the world the US has the best companies. That's almost. Not even a point to argue. Look.
At all the best companies that give the best shareholder returns, they're in the United States and even in the future, you can look. At where risk capital is where there's investor appetite, where there's people. Starting new businesses. Entrepreneurs all these different. Software companies and AI companies most of that is happening still in the United states another way of looking at this is Tom Lee's basically arguing that the United. States if.
It was like a business. It's got a very good economic Moat, It's a very good quality business and it can endure even if a leadership. Is doing some crazy. Things, even if they're just shooting from the hip from time to time, the business will endure. So I agree, and my money's going to stay. Where I believe we have. The best companies in the world, and most of those are in the United States.
Now, finally, we get to a news. Story here that's just incredible here's just the title of it the. AI shopping app found to be. Actually powered by. Philippines call center workers Now that understates what's going on a fintech founder in the US has been charged with fraud after it was. Found that his artificial. Intelligence Shopping app relied heavily on the Philippines call center employees to complete the purchases manually. So the app was. Reportedly.
Marketed as a universal shopping cart app that simplified online shopping by AI by enabling its. Users to skip. The checkout on retail. Websites by reducing purchases. To a single tap. For example, if someone wanted to buy a their sneakers for instance. They could just buy the. Sneakers by opening the Nate app and clicking Buy. The. App claimed it would take. Care of the remainder of the checkout. Using AI such as quote selecting. The appropriate.
Size, entering billing information and shipping information and confirming the purchase. So that was the whole premise of this app is. That you you basically. Have an app, you go in and you just click on an item, click buy. You don't have to go through any of the sizing or checkout options. Artificial intelligence would do that. For you in truth. Nate relied heavily on teams of human workers, primarily located overseas, to manually process transactions in secret.
Mimicking what? Users believed was. Being done by automation. Hundreds of contractors or quote. Purchasing assistance in the Philippines and call. Centers were. Working to manually. Complete the purchases. Occurring over the Nate app, the investigation found now the Department of. Justice tried to estimate. How much of the actual? Purchases were completed by Artificial. Intelligence and not humans. And they said it was around 0%. I would love.
To just ask this. Founder What was the plan here? When did he? Realize this was. All going to cave in. He couldn't have fully. Expected it to work out to. Promise to people was. All driven by artificial. Intelligence while secretly having the Philippines complete the. Purchases. At some point he had a no. He was way in over his head and the. The ruse was up, the the jig was up. This isn't going to work forever.
I'd love to know when that was. So hopefully we get some type of documentary, something small that explains this in greater detail, because I'd. Love to get the bigger story. Behind it, but that's going to be for this episode. Hope you enjoyed seeing the next one.